PRESIDENT BARACK OBAMA: Let's make 2010 the year we finally reform
health care.

TAPPER: What hurdles remain for Democrats to arrive at a final health
care bill? Can Republicans still stop it? Those questions for our
headliners, the president press secretary, Robert Gibbs, and the top
Republican leader in the Senate, Mitch McConnell, only on THIS WEEK.

Plus, more debate and analysis and predictions for 2010 with our
"Roundtable.": Nobel Prize-winning economist Paul Krugman; former Bush
strategist Matthew Dowd; David Brooks of The New York Times; and Ruth
Marcus from The Washington Post.

And as always, "The Sunday Funnies."

JAY LENO, HOST, "THE JAY LENO SHOW": Meteorologists are calling this a
record blizzard, which makes sense if you think about it. I mean,
Republicans always said the Senate would pass health care when hell
freezes over. And apparently…

(LAUGHTER)

LENO: Apparently it has.

ANNOUNCER: From the heart of the nation's capital, THIS WEEK WITH GEORGE
STEPHANOPOULOS, live from the Newseum on Pennsylvania Avenue, filling in
this morning, ABC News senior White House correspondent Jake Tapper.

(END VIDEOTAPE)

TAPPER: Good morning.

We're learning more about the 23-year-old Nigerian man the U.S.
government has charged with trying to blow up that Northwest Airlines
flight on Christmas Day. He told investigators that the explosive
material had been sown into his underwear and his name was known to U.S.
officials but it never made it onto a no-fly list. Now air travelers
will face stepped-up security measures

Joining us this morning from San Francisco, Homeland Security Secretary
Janet Napolitano.

Madam Secretary, thanks for joining us.

JANET NAPOLITANO, SECRETARY OF HOMELAND SECURITY: Good morning.

TAPPER: I want to get your reaction to a comment from the chairman of
the Senate Homeland Security Committee, Joe Lieberman of Connecticut,
who said in a statement: "I am troubled by several aspects of this case,
including how the suspect escaped the attention of the State Department
and law enforcers when his father apparently reported concerns about his
son's extremist behavior to the U.S. embassy in Lagos, how the suspect
managed to retain a U.S. visa after such complaints, and why he was not
recognized as someone who reportedly was named in the terrorist database."

Madam Secretary, how do you answer Senator Lieberman's questions?

NAPOLITANO: Well, I think, first of all, we are investigating, as
always, going backwards to see what happened and when, who knew what and
when. But here -- I think it's important for the public to know, there
are different types of databases.

And there were simply, throughout the law enforcement community, never
information that would put this individual on a no-fly list or a
selectee list. So that's number one.

Number two, I think the important thing to recognize here is that once
this incident occurred, everything happened that should have. The
passengers reacted correctly, the crew reacted correctly, within an hour
to 90 minutes, all 128 flights in the air had been notified. And those
flights already had taken mitigation measures on the off-chance that
there was somebody else also flying with some sort of destructive intent.

So the system has worked really very, very smoothly over the course of
the past several days.

TAPPER: Well, let me ask you a question about intelligence-sharing. When
the suspect's father went to the U.S. embassy in Nigeria and said, I'm
worried because my son is displaying extremist religious views, how was
that information shared with other parts of the U.S. government, or did
it just stay at that U.S. embassy?

NAPOLITANO: Well, again, we are going to go back and really do a
minute-by-minute, day-by-day scrub of that sort of thing. But when he
presented himself to fly, he was on a tide (ph) list. What a tide list
simply says is, his name had come up somewhere somehow.

But the no-fly and selectee list require that there be specific, what we
call, derogatory information. And that was not available throughout the
law enforcement community. He went through screening in Amsterdam as he
prepared to board a flight to the United States.

The authorities in Amsterdam are working with us to make sure that
screening was properly done. We have no suggestion that it wasn't, but
we're actually going through -- going backwards, tracing his route.

But I think important for the traveling public recognize that A,
everybody reacted as they should. We trained for this. We planned for
this. We exercised for this sort of event should it occur.

And B, we have instituted additional screening in what we call
mitigation measures that will be continuing for a while. And so we ask
people perhaps to show up a little bit earlier at the airport during
this heavy holiday season, and to recognize we're going to be doing
different things at different airports.

So don't think somebody at TSA is not on the job if they're not doing
exactly at one airport what you saw at another. There will be different
things done in different places.

TAPPER: But, Secretary Napolitano, you keep saying everybody acted the
way they were supposed to. Clearly the passengers and the crew of that
Northwest Airlines flight did. But I think there are questions about
whether everybody in the U.S. government did.

And here's a question for you, how many of -- so many of us are subject
to random security searches all the time, how come somebody who is not
on a terrorist database isn't subject to more stringent security when
they check in to a flight to the U.S.? Why does that automatically just
happen?

NAPOLITANO: Well, if he had had specific information that would have put
him on the selectee list or indeed on the no-fly list, he would not have
actually gotten on a plane.

But those numbers pyramid down. And they need to, because again, there
is lots of information that flies about this world on a lot of different
people. And what we have to do in law enforcement is not only collect
and share, but do it in the proper way.

Now once this incident occurred, everything went according to clockwork.
Not only sharing throughout the air industry, but also sharing with
state and local law enforcement, products were going out on Christmas
Day, they went out yesterday, and also to the industry to make sure that
the traveling public remains safe. .

And I would leave you with that message, the traveling public is safe.
We have instituted some additional screening and security measures in
light of this incident. But again, everybody reacted as they should, the
system -- once the incident occurred, the system worked.

TAPPER: What can you tell us about the suspect? Has a definitive
connection with Al Qaida been established yet?

NAPOLITANO: That is now the subject of investigation. And it would be
inappropriate for me to say and inappropriate to speculate. So we'll let
the FBI and the criminal justice system now do their work.

TAPPER: OK. One final question for you, Madam Secretary: An October
report from the Government Accountability Office says that almost $800
million has been spent on new screening technologies by the
Transportation Security Administration since 2002, but, quote, "since
TSA's creation, 10 passenger screening technologies have been in various
phases of research, development, test and evaluation, procurement and
deployment, but TSA had not deployed any of these technologies to
airports nationwide."

More than eight years after 9/11, an incident obviously involving
airplanes, why have these technologies not been deployed to airports
nationwide?

NAPOLITANO: Well, without going into the accuracy or inaccuracy of that
particular report, new technology has been deployed, but there is a more
important point to be made, which is that, A, technology is evolving all
the time, it's not a static situation.

And B, even with the most sophisticated technology, everybody needs to
play a part in their security. That's why I think the actions of the
passengers and the crew on this flight deserve praise. That's why the
men and women who have been working really overtime Christmas Day,
yesterday, whatever, to make sure that all other flights remain safe,
why that system is so important.

You just -- you can't rely on just one part of your security system, you
have to look at the system as a whole.

TAPPER: All right. Madam Secretary, thanks so much for joining us.

NAPOLITANO: Thank you.

TAPPER: And now we'll turn to the president's chief spokesman and close
adviser, Robert Gibbs.

TAPPER: The terrorist attack almost happened, had it not been for a
faulty detonator. Are you confident that the Obama administration is
doing everything it needs to do and did so in this instance to keep the
American people safe?

GIBBS: Absolutely, Jake. Let's touch on a few things that the secretary
just touched on. The database that this individual was on contains about
550,000 names, OK? A smaller database of about 400,000 of those names
are what selectee and no-fly lists are drawn from.

The selectee list has about 14,000, the no-fly list 4,000. So you can
see the database that many government agencies and are concerned into is
whittled down into much smaller no-fly and selectee lists.

What the president has asked for as a result of this incident are two
look-back reviews. First, on our watch-listing procedures, did the
government do everything that it could have with the information that
they had? Understanding these procedures are several years old. Did we
do what we needed to with that information, and how can we revise watch
listing procedures going forward to ensure that there is no clog in the
bureaucratic plumbing of information that might be gathered somewhere
going to the very highest levels of security in our government.

Second, obviously we have to review our detection capabilities. The
president has asked the Department of Homeland Security to, quite
frankly, answer the very real question about how somebody with something
as dangerous as PETN could have gotten onto a plane in Amsterdam. I
think those are the two things that -- two reviews that have come
directly out of this.

But Jake, the president is very confident that this government is taking
the steps that are necessary to take -- to take our fight to those that
seek to do us harm. And I'll go through a few things that he's done.
First, we're drawing down in Iraq, and focusing our resources on
Afghanistan and Pakistan, the places in the world where attacks have
previously been planned, and where this planning goes on now. We've
strengthened our partnerships and cooperation with a number of
countries, including Yemen, Somalia and Pakistan, as I mentioned before,
and used all elements of our American power to seek to eliminate heads
of Al Qaida, and we've had great success in all three of those countries.

TAPPER: Let me ask you a question. Knowing the president -- I've been
covering him for a few years -- I can't imagine that he would hear this
guy's father reported to the U.S. embassy that he has extremist
religious views, and within a matter of weeks, he boards an airplane
with explosives on his person and is not subject to additional security.
I can't believe that he would not hear that information and say, "that's
nuts." Why did that happen?

GIBBS: Jake, he's heard that information and heard it not long after it
was brought to the situation room. That's what has precipitated both a
watch listing review and a detection capabilities review, to ensure that
one, the information that we have goes through the process the right way
and surfaces to those that have to make those decisions. Again, we have
a watch list that this individual was on, that contains about 50 --
550,000 names. So this individual was listed in November of 2009 on that
database based on that information. The no-fly list and the selectee list...

GIBBS: Well, again, Jake, I think if you read the papers this morning,
you'll find that the name was listed, concern was brought, but the
ability...

TAPPER: Brought to who? Anybody can just write down a name. I mean...

GIBBS: No, no, this is a database that a series of agencies enter names
into, and a series of agencies draw information from. But again, Jake,
the investigation will look backwards and figure out if any signs were
missed, if any procedures can be changed about how names are
watch-listed. But again, understand there are 18,000 people on either a
selectee or a no-fly list. This is a database that contains -- I'm
sorry, 550,000 of those names. It's a huge number. We have to ensure and
the president has asked that a review be undertaken swiftly to ensure
that any information that's gathered and put into any database, that it
gets to where it needs to go, to the people that are making decisions.

But again, Jake, understanding, 550,000 are on that one database. The
president wants to review some of these older procedures and see if,
quite frankly, they are outdated...

TAPPER: They need to be updated.

GIBBS: ... (inaudible) what we're facing today.

TAPPER: I want to (inaudible), just because I want to get to health care
reform with the limited time we have left.

GIBBS: Sure.

TAPPER: There was some deal-making that went on as the legislation hit
the House and hit the Senate, especially. And that kind of deal-making
is one of the reasons that President Obama, then Senator Obama, pledged
this on the campaign trail.

(BEGIN VIDEO CLIP)

OBAMA: Well, have the negotiations televised on C-SPAN, so the people
can see who is making arguments on behalf of their constituents and who
is making arguments on behalf of the drug companies or the insurance
companies.

(END VIDEO CLIP)

TAPPER: Now, PolitiFact labeled that a broken promise. I'm not -- I am a
little bit more generous this Christmas spirit. You still have one more
step in the negotiation process, and in fact President Obama said this
to PBS about this final reconciliation between the House bill and the
Senate bill.

(BEGIN VIDEO CLIP)

OBAMA: There needs to be some more work before we get to the point where
we're not changing the status quo, and that's the goal.

(END VIDEO CLIP)

TAPPER: In any case, it's sound of President Obama saying, we hope to
have a whole bunch of folks over here in the West Wing, I'll be rolling
up my sleeves and spending some time before the full Congress even gets
into session, because the American people need it now. So with that in
mind, will the president open up the doors for this final negotiation?
He's in charge of it. It's going to be taking place at the West Wing.
You have Democratic leaders from the House and Senate reconciling this
House and Senate bill. Will he commit to opening up that process to
C-SPAN cameras so we can see how this happens?

GIBBS: Well, Jake, first of all, let's take a step back and understand
that this is a process legislatively that has played out over the course
of nine months. There have been a countless number of public hearings.
The Senate did a lot of their voting at 1:00 and 2:00 in the morning on
C-SPAN. A lot of this debate -- I think what the president promised and
pledged was so that you could see who was fighting for their
constituents and who was fighting for drug and insurance companies...

TAPPER: But he was talking about negotiations, not voting.

GIBBS: Well...

TAPPER: The bill being put together.

GIBBS: Well, but the bill gets put together on the floor of the Senate.
That's where the bill got augmented. And I think if you watched that
debate -- I don't know -- I wasn't up at 1:00 or 2:00 in the morning for
a lot of those votes, but I think if the American public had watched --
has watched the committee process play out in both the House and the
Senate, watched the process play out on both the floor and the -- the
floor of the House and the floor of the Senate, you'd have seen quite a
bit of public hearing and public airing, and I think quite frankly,
people have a pretty good sense of who is battling on behalf of
thousands of lobbyists that are trying to protect drugs profits and
insurance profits, and who's fighting on behalf of middle-class
Americans hoping once and for all to have access to affordable insurance
and removing insurance company restrictions like discriminating against
people that are sick.

TAPPER: All right, Robert Gibbs, we'll have to leave it there. Thanks so
much for joining us. Happy holidays and good luck.

GIBBS: Happy holidays and to you, your family and to all your viewers,
happy new year.

TAPPER: Thank you.

TAPPER: Senator McConnell, thanks so much for joining us.

MCCONNELL: Good morning, Jake.

TAPPER: Well, turning back to the terror attack or the attempted
terror attack, the Obama administration was following procedures
established by the Bush administration in creation -- in the creation of
the TSA. Are they doing enough? Does more need to be done?

MCCONNELL: Well, our leader on this issue, Senator Susan Collins of
Maine, suggested to me yesterday, when we were talking about this, a
question she's going to be asking, which is, how does a person on the
terrorism watch list get a U.S. visa? I mean, particularly when you
consider that his father was concerned about his son's proclivities this
fall?

I think there's much to investigate here. And in addition to that,
he obviously had some kind of connections with Yemen. And we know there
was an imam in Yemen who may have been the inspiration for the Ft. Hood
attack. There is much to investigate here. It's amazing to me that an
individual like this, who was sending out so many signals, could end up
getting on a plane going to the U.S.

TAPPER: Do you think individuals who are on either of the two
terrorism databases that Robert Gibbs referred to, do you think that
they should automatically be at the very least subjected to additional
security searches at airports?

MCCONNELL: It only makes common sense.

TAPPER: All right. Well, turning to health care reform, which is
another big issue on the plate of the administration and of course on
your plate as well. You've been criticized by several conservative
voices, Rush Limbaugh, Erick Erickson at Redstate.com and others, for
not doing enough to stop health care reform. As the Senate Democrats
passed the bill, you said this fight is not over, my colleges and I will
work to stop this bill from becoming law. So what are you going to do
and what can you do with only 40 votes?

MCCONNELL: Well, first, every single Republican opposed the
measure. All of the procedural devices that are available to slow down
a measure were employed. It didn't pass until Christmas eve at 7:00
a.m. The American people are overwhelmingly opposed to the bill. I'm
not sure what's to criticize about that from a conservative point of
view. And of course, the bill is not law yet. It's still got be
reconciled between the House and Senate. There are deep differences
among Democrats. Every single Democrat in the Senate provided the one
vote that passed this 2,700-page monstrosity. It cuts Medicare by half
a trillion dollars, raises taxes by half a trillion dollars, and instead
of curbing the rate of increase of insurance premiums, most Americans'
insurance premiums are going to go up.

This bill is a colossal failure, and that's why the American people
were literally screaming at us, you know, please, don't pass this bill.

TAPPER: You criticize this bill for cutting Medicare. And there
are Medicare cuts in this. Medicare Advantage is cut. Doctors' fees
are cut 21 percent next year. But you have a history also of voting for
Medicare cuts as well. In a 1995 deficit reduction plan, you voted to
cut Medicare by $270 billion. In a 1996 budget resolution, you voted to
cut it $158 billion, and in the 1997 Balanced Budget Act, you voted to
slow its growth by $393 billion. How do you square those votes from
when Senate Republicans ran the Senate, with your current criticism of
the bill for cutting Medicare?

MCCONNELL: Easily. Those reductions were related to making the
Medicare program itself, which is going broke in seven years, more
sustainable. What they're doing here is using Medicare as a piggy
bank. They're taking half a trillion dollars out of Medicare, not to
save Medicare or to make it more sustainable, but to spend it on a new
entitlement program for a whole different set of Americans. So we don't
think you ought to take grandma's Medicare and start a new program for
someone else.

TAPPER: Do you think that Republicans running for Senate in 2010
should run on a platform of vowing to repeal the health care reform
bill, should it become law? And will that be one of your first items
should you regain control of the Senate, repealing what you guys call
Obama-care?

MCCONNELL: Well, certainly, politically, it's a big problem for
them. They all kind of joined hands and went off the cliff together.
Every single Democrat provided the vote that passed it in the Senate.
You have seen what's happened already with Congressman Parker Griffith
in Alabama switching parties. There are rumors there may be others.
There is great unrest in the Democratic Party. And the reason for that
is, the surveys indicate the American people are overwhelmingly opposed
to this effort to have the government take over all of their health
care. It will be a huge political issue next year, and that's why you
hear the Democrats saying, let's don't tackle any more big issues. I
mean, I was reading an article this morning indicating they don't want
to do cap-and-trade anymore, they're nervous about financial
reregulation. What they understand is the new administration and the
new Congress has squandered its goodwill with the American people,
leading to what could be a big setback for them a year from now.

TAPPER: Respectfully, sir, you didn't answer my question, which is
should Republicans campaign on a platform of repealing the health care
reform measure? And will that be one of the first items on your agenda
should you become the new Senate majority leader after the 2010 elections?

MCCONNELL: Well, I'm sorry, I thought I did answer your question.
There's no question that this bill, if it were to become law, and
frankly even if it doesn't become law, will be a big, if not central
issue not only in the 2010 election, but in the 2012 election.

TAPPER: All right, I'll take that as a yes, that they should
campaign on repealing Obama care.

You cut a deal with Harry Reid to secure a vote on the debt limit
issue for the first week that Congress returns, a stand-alone vote on
the debt limit plus five Republican amendments. Why was that important
to you?

MCCONNELL: Well, look, this administration has run up more debt in
its first year than the previous one in four years. They passed a
budget that will double the debt in five years, triple it in 10.
Raising the debt ceiling is no longer an automatic. This is the
nation's credit card we are talking about, and so we think it's
important to have a debate with amendments about what we intend to try
to accomplish for the American people to get this debt down. Americans
are afraid that their children are no longer going to have the kind of
country they have had because of this burgeoning national debt. And
raising the debt ceiling is a good time to have that debate.

TAPPER: The Congressional Budget Office says that the health care
reform bill will actually reduce the deficit by $132 billion. But
there's also this criticism from Bruce Bartlett, an official in the
administrations of Ronald Reagan and George H.W. Bush, who wrote in a
"Forbes" magazine article, titled "Republican Deficit Hypocrisy," that
the 2003 Medicare prescription drug benefit offered by the Republican
Senate was, a quote, "pure giveaway," that quote, "had no dedicated
financing, no offsets, no revenue raisers. 100 percent of the cost
simply added to the federal budget deficit." Quote, "As far as I'm
concerned, any Republican who voted for the Medicare drug benefit has no
right to criticize anything the Democrats have done in terms of adding
to the national debt."

Senator, you voted for that Medicare prescription drug benefit,
which some say will cost $1 trillion over 10 years and was not offset by
revenue or spending cuts.

MCCONNELL: Well, the first thing, you should notice that it came in
30 percent underbudget because of the competitive mechanisms that are
involving in extending a prescription drug benefit to seniors. The
Democrats criticized it at the time because it was not generous enough.
And look, they have gone far beyond any deficit spending discretions --
indiscretions that Republicans might have had. In their first year
alone, they ran the deficit up more than the last four years of the Bush
administration combined.

Enough is enough. The American people are expecting us to stop this
effort to spend, tax, and borrow us into oblivion, which has been going
on for the last 12 months.

TAPPER: All right, Senator Mitch McConnell, have a good holiday.
Thanks so much for joining us.

MCCONNELL: Same to you, Jake.

TAPPER: The roundtable is next with David Brooks, Ruth Marcus,
Matthew Dowd, and Paul Krugman. And later, the "Sunday Funnies."

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

SEN. CHRISTOPHER S. BOND, R-MO.: 'Twas the week before
Christmas, when all through the Hill, not a creature was stirring, not
even a bill.

SEN. ROLAND BURRIS, D-ILL.: People had voted; they mandated
reform, but Republicans blew off the gathering storm.

BOND: How far away from common sense we've been led. Our kids
and grandkids have their futures to dread.

BURRIS: Democrats explained, as they drove out of sight, better
coverage for all, even our friends on the right.

TAPPER: Ah, the Christmas stylings of Senators Kit Bond and
Roland Burris. And joining us now to talk about health care reform,
which their poems were about, and also other issues, are David Brooks
and Matt Dowd, Paul Krugman and Ruth Marcus.

Thank you so much for joining us.

We're going to start with, obviously, the alarming Christmas
attack that almost happened. David, you heard Secretary Napolitano
and Robert Gibbs give their answers about why this guy was allowed on
the plane.

Did it -- pardon the pun. Did it fly with you?

(LAUGHTER)

BROOKS: Yes, I actually don't think it passed the laugh test
with me.

Listen, we all go through the airport. We all go through the TSA
screening procedures. And at least I and I think a lot of people have
the sense that it's a jobs program, not a security program, that it's
all a joke; people can sneak stuff through.

And that, sort of, reconfirms that. It was the passengers, not
the official program that does this.

And the second thing is, the guy was actually fitting every
single stereotype of a terrorist you could possibly imagine. He was a
rich guy; he went to fancy schools; he was a mechanic; he gets
radicalized; and then he's on the watch list. So it's like a perfect
bit of stereotypical profiling would catch this guy, and even in this
case, they couldn't seem to do it.

TAPPER: Matt, when -- when Richard Reid, the shoe bomber, did
the same thing, or failed in his attempt to blow up a plane, President
Bush -- then-President Bush did not come out, did not say anything to
the nation. President Obama followed that playbook. Is that the
right thing?

DOWD: Well, yes, part of the problem here is that all the facts
that you think are true at the beginning turn out not to be true as
the days go on. Some of that stuff we've learned in the process of
this, as, actually, we're learning some of the things we first heard,
we didn't catch.

But how are -- the real question is, it's, what are we doing --
what are we spending the billions of dollars on, as David says, that
are really doing the job?

Is it a jobs program or is it a government employee program or is
it a terrorist-catching program? And I think that's the question.

MARCUS: And I think one of the really -- there's two really
alarming things that happened here. The first was, this suspect's
father went to the U.S. authorities and said, you may have a problem
here. He's not a U.S. citizen. He's a Nigerian national. He's got a
multiple-entry visa to the United States. He has no entitlement to
that. Why wasn't he -- why wasn't that visa yanked? Why wasn't he,
at the very least, moved to the top of a real watch list, not the
550,000.

I don't think that this is the Obama administration's fault.
This is the way that bureaucracies work or don't work.

And, then, second, as David said, the screening processes --
clearly, though we've spent billions and billions of dollars, there's
simply not enough equipment to find the things that need to be found.

KRUGMAN: I think we do want -- I mean, someone's head ought to
roll over this. Something needs to be looked at. But if you read
your military history, every major military surprise that ever
happened, there were ample warnings. You go back to the record; you
find out there was information.

The trouble is, there is so much information. You know, there's
500,000 people on this list we're talking about. Stuff is going to
fall through the cracks. Ultimately, you do what you can, but someone
who is prepared to die while killing a bunch of civilians, that's
going to happen now and then. In fact, we're quite lucky it didn't
happen now.

But, you know, I think -- I think we are using a lot of 20/20
hindsight. What was the kind of thing that always happens whenever
anything goes wrong.

(CROSSTALK)

DOWD: Well, to me, OK, so the situation now is, what do we do in
the aftermath of this?

So what it looks like we usually do is we profile an article of
clothing, not the person.

(LAUGHTER)

And so we're reluctant, because of politically correctness, to
profile a person, but the shoe bomber happens and now we all have to
put our shoes on the conveyer belt for it to go through, and we're not
going to profile a person.

This guy's underwear is on fire...

(LAUGHTER)

I'm afraid what we next have to profile...

(CROSSTALK)

(UNKNOWN): Everyone's going to have to wear their underwear on
the outside.

(LAUGHTER)

(CROSSTALK)

BROOKS: They're talking about -- TSA's now talking about new
rules for international flights. For the last hour, you can't have
any personal items in your lap. You can't get up for the last hour of
a flight on international flights. So this is going to affect us in
the same way.

But, you know, one of the other interesting things about this,
Ruth, is that this man, apparently, according to the information we
have now, and it's early. You point out a lot of the early
information turns out to be wrong.

But, apparently, he spent time in Yemen and was trained by Al
Qaida in the Arabian peninsula, which -- and this is an increasing --
I don't want to say that this is necessarily a new front in the war on
terror, but this is coming up over and over. There was a U.S. Yemen
air strike on Thursday morning.

MARCUS: I think you could say it's a new front in the war on
terror. It's not particularly surprising. And it doesn't mean that
Afghanistan isn't a concern and the areas in Pakistan aren't a
concern. But it does underscore the new reality that terror is -- you
know, it's a, sort of, floating crap game. And you can move to it
different locations. And if you have a failed or failing state, as
Yemen is, as Somalia is, things can -- those are breeding grounds and
areas where Al Qaida in the Arabian peninsula is flourishing.

BROOKS: Let's not materialize it. It's an ideological thing. I
mean, this guy, as I said, fit the classic profile. He's rich. He's
trapped between two worlds, the traditional world of his imagined past
and the modern world of being a mechanical engineer.

And this is just like the 9/11 guys, sort of, like the Fort Hood
guy. And so they're trapped between these two worlds, and they
imagine some pure Islamic ideology of the past which they're going to
act out by killing people. And it's the ideology that matters, and it
can happen to somebody living in London or Hamburg or anywhere else
around the world, and then they find Yemen.

TAPPER: There are reports -- and again, early reports -- reports
that he may have been radicalized in London, where he went to school.

But I want to turn now to another big issue, which is health care
reform, which I know has been consuming a lot of your attention.

Specifically, Paul, you wrote a recent op-ed saying -- in favor
of the Senate health care reform measure. And you said those who
oppose it fall into three groups. These are your characterizations,
not mine.

One would be the crazy right. Two would be unhappy progressives
who wanted more. And three would be what you called the "Bah, Humbug"
caucus, fiscal scolds.

Now, I don't want to point fingers, but...

(LAUGHTER)

... one of your fellow colleagues in the New York Times op-ed
page, is opposing the health care reform measure.

KRUGMAN: Right.

TAPPER: I'm assuming you don't think David is a member of the
crazy right?

(LAUGHTER)

BROOKS: Let's not jump to conclusions.

(LAUGHTER)

(CROSSTALK)

MARCUS: ... disappointed progressive.

KRUGMAN: Let me say this. The objection, supposedly, is it
doesn't do enough control costs. And you have to ask, you know, what
more, realistically, could you expect?

I know David (inaudible) in one article of his. There was a
later one, a recent one, which said, look, they are in fact trying
everything that people have suggested, in the form of pilot programs.
There's a whole list of things that we think might control costs.
This is going to be in the legislation. It's something that's going
to be tried.

This is the first serious attempt we've made to control health
care costs. And by doing that, it actually proves something to people
like me, advocates of universal coverage have been saying, which is
that the only way to control costs is as part of a package that also
covers the uninsured, that you're not going to be able to just go and
say to people, OK, we're going to take away some of your health care.
You're going to have to go to them and say, this is is what we need to
do in order to provide health security to everybody.

And this is a -- this is landmark piece of legislation, flawed,
annoying, underfunded. Lots of things are wrong with it. I wish
there was a public option. I wish there were lots of things in there.
But this is the most dramatic move toward getting rational about
health care spending, at the same time that it finally fills at least
a good part of the hole in our system, the holes in our safety net.

So, you know...

(CROSSTALK)

BROOKS: I don't oppose it because I want to step on the necks of
the poor, as you could say. I oppose it, and it's a close call for
me. Because we used to spend 10 percent of our GNP on health care;
now it's 17 percent. Soon it will be 20 percent, 22 percent -- more
on health care, less on education, less on infrastructure, less on
investment, less on everything else.

This bill will do absolutely nothing. It will slightly increase
the amount of money we spend on health care. So what could you do
politically to do something about that? Well, I wouldn't mind a
single-payer. Frankly, I'd prefer a single-payer to what we have now,
because that actually would control costs.

My preferred option, though, would be to give consumers choice.
There are health economists, (inaudible). There was a bill, called
the Wyden-Bennett bill. And people said, oh, it's politically
impossible.

Well, this bill, right now -- in the NBC/Wall Street Journal
poll, has 32 percent support. I think I could get 32 percent support
for some consumer-related bill that would...

(CROSSTALK)

KRUGMAN: I think this is actually important. A fair number of
the people who say they don't support it wanted something stronger,
wanted something more aggressive. So it doesn't break down that way.

And if you ask people about specific provisions, by and large,
they get public support. I know the example of Massachusetts. This
is, kind of, a Massachusetts-type program for the United States,
better than a Massachusetts program, but along those lines.

If you ask people, do you approve of -- now that they have it in
Massachusetts -- do you approve of it, it's not very favorable.
If you ask people, do you want to get rid of it or do you want to
maintain it and perhaps extend it, overwhelming support, 79 percent of
the Massachusetts public wants the program to continue.

I think that's the way this is going to work. This bill is going
to be -- people will complain. They'll say, oh, this isn't what I
want; this isn't good. You'll ask, do you want to go back on it, and
overwhelmingly, they'll say no.

TAPPER: And you think -- you think -- you would go farther. I
couldn't really get Senator McConnell to say that Republicans should
campaign on repealing Obama care as they call it. But you think they
should campaign?

DOWD: I think if this bill passes, it's the best thing for the
Republican Party in the short run if this bill passes. I think
there's no question about the polling on this as consistent. The
majority of the country is opposed to it. The majority of the country
thinks their health care, their own health care costs will go up. The
majority of the country thinks the overall cost of the systems will go
up. And the majority thinks their care will get worse.

Now we can argue in Washington or whatever at the Capitol and say
we know better than the public does on this or we know what they
should get, but the country is decided on this. The country is
overwhelmingly decided on this. And Congress has proceeded to go
against what the public wants and pass a bill. And whether it is good
in parts, bad in parts, whatever it happens to be, the country doesn't
want it. And if it passes in January and they don't sell it, which I
don't think they're going to do, because they have to figure out it's
negative in its entirety, they're going to go on to jobs but it's
going to be an albatross on almost every Democrat in a swing district
in the country.

TAPPER: I want to come to you in a second, but in fact one of
the members of Congress speaking against the health care bill is a
former freshman Democrat from Alabama now freshman Republican from
Alabama, Parker Griffith. This is what the National Republican
Campaign Committee was saying about Parker Griffith last year in a TV
ad.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: 2000, the USS Cole was attacked. 2001,
terrorists attack America. 2008, the Marriott in Pakistan is bombed
but Parker Griffith says we have nothing to fear from radical Islam.

PARKER GRIFFITH: I think America's greatest enemy is America and
its materialism. We have nothing to fear from radical Islam.

UNIDENTIFIED MALE: Parker Griffith, wrong for Alabama.

(END VIDEO CLIP)

TAPPER: Now, of course, the Republicans say Parker Griffith is
right for Alabama. But there are those who think that this is
something of a canary in a coal mine, Parker Griffith's defection.
Among them, the former commerce secretary William Daley who said in an
op/ed in the "Washington Post," "While it may be too late to avoid
some losses in 2010, it is not too late to avoid the kind of rout that
redraws the political map. The leaders of the Democratic Party need
to move back toward the center."

Is Daley right? Do the leaders of Democrat Party need to move
more toward to the center?

MARCUS: I thought he overstated the case and I think Parker
Griffith is going to turn out to be a pretty lonely canary in that
coal mine.

There's no indication from talking to the people who would know
that any other potentially squishy Democrats are thinking about
morphing themselves into Republicans. And I think that to get back to
Matt's point about the potential albatross of the health care bill,
absolutely they're going to pivot to jobs, jobs, jobs. Absolutely if
they don't start to also simultaneously sell this health care bill.
We're all talking about it as if it's a fait accompli but it will be
eventually, I think, Senator McConnell's desire not withstanding.

If they don't find a way to also sell it as a positive
transformation, it is going to be an albatross.

TAPPER: How do they do that?

MARCUS: By talking to people. Well, it's both doable and
complicated. The complicated part is that many of the things that it
will achieve will not start until 2013 or 2014. So it's a little hard
to say to people, life is going to be great two elections from now if
you don't have health care or if you're nervous about your health
care. But there's going to be a lot of talk about the immediate
deliverables, which is one of the terms that the administration uses.

So for example, senior citizens -- senior citizens, who are A,
nervous about what's happening to their Medicare, witness grandma,
will have their donut hole filled or somewhat filled very quickly.
And people will be able to keep their kids on their insurance policies
after they're out of college until age 26 or 27. So there's going to
be some focus on that. It is hard to talk about legislation that is
promising something in the future as and inevitably they will, as
people's health premiums continue to go up.

TAPPER: Can the Democrats sell this?

KRUGMAN: Some. I mean, I'm waiting for the first poll that asks
do you want to repeal this which is very different from whether you
approve of it. And I bet you're not going to find anything like those
numbers.

Let me also say about Parker Griffith. As I've looked at it, I
think the correct description of him is he's a living fossil. He's
sort of the last Dixiecrat. All of those conservative Democrats in
the South are now Republicans and here's this one guy whose left over.
It isn't necessarily an omen of very much.

I don't think health care is going to be a big sell for the
Democrats. It's something they have to do. To go through -- this was
something that was a core issue during the campaign. It's a core
promise to the base, even if part of the base is temporarily at least
really riled up as to what they wanted.

So it was something they had to check off. It's a little bit in
a way like the Medicare drug benefit back in 2003 which didn't phase
in for a long time. It was something that Bush had to do in order to
just shore up that front.

So I don't think the campaign will be about health care. I think
it is going to be about jobs, the economy, and just do you want those
guys back in?

BROOKS: When FDR did the New Deal, 70 and 80 percent of the
American people basically had a good view of the government. Now,
like 15 or 20 percent of the American people have a good view of
government. So if you have a whole series of things that look like
big government and a lot of spending, they're going to take it out on
you. And I don't know if more people will switch, but 20 House
members, House Democrats are going to lose in all those states, North
Carolina. They're just going to get wiped out. Harry Reid might get
wiped out. People will get wiped out across the country.

TAPPER: I was just going to say, this is an end of the year
show. So it's a good time for predictions. And you've just offered
yours. Charlie Cook, the respected political prognosticator predicted
that Republicans will pick up 20 to 30 seats in the House, and four to
six in the Senate. You said 20 in the House, how many in the Senate?

BROOKS: I'm with Charlie. Twenty or 30 at least. And look at
states like Illinois which is a Democratic state, got a very moderate,
very impressive candidate, Mark Kirk has a chance to win there.
You'll see some unexpected places. I think assuming things don't
change, the Republicans will do pretty well and they'll repeal half of
health care, only the painful half.

DOWD: Well, I agree with that. I think they're going to
probably pick up 25 seats in the House and they're probably going to
pick up five seats in the Senate.

TAPPER: Still not enough to control.

DOWD: No, but I think one prediction I have in the aftermath, of
that, which I think will happen, the Republicans will misread the
mandate. The Republicans will think it was because of something they
said or they did as opposed to the Democrats went off tangent and
wasn't in line with the American public and the Republicans will do
something, which actually in my view, could be a benefit for Barack
Obama going into 2012 if he has to deal with a more Republican
Congress and then he can pivot against what the Republicans are doing.

KRUGMAN: Can I just say, mega dittos to that?

TAPPER: Prediction for election 2012?

MARCUS: So my prediction is slightly rosier. Let's remember ...

TAPPER: Rosier for Democrats?

MARCUS: Rosier, slightly rosier for Democrats. And let's
remember the president's party always -- almost inevitably loses seats
in the mid-year election. And I think the answer to the question
depends on what Paul can tell us about where the economy is --
particularly where the unemployment rate is going to be in next spring
heading into the fall because that will really determine how people
feel about the incumbent party.

I say some in the House, somewhere in the 20s, anything under 20
will be viewed by Democrats as a huge sigh of relief for them. In the
Senate, I think it's a little bit more complicated. There are more
Republican senators retiring than Democrats and in more divided swingy
type states. And so I would say closer to three.

TAPPER: OK, we are getting close to short on time but I do want
to ask you a question about the economy for 2010. Your fellow
laureate, Joseph Stiglitz has said there's a significant chance the
U.S. economy will contract in the second half of 2010. He's calling
on the government to prepare a second stimulus. Do you think that's
possible?

KRUGMAN: Yes, it's a reasonably high chance. I don't think it's
more -- it's less than 50/50 odds, but you know, what we've got right
now is a recovery that first of all is not showing up very much in
jobs yet. It's being driven by fiscal stimulus which is going to fade
out in the second half of next year and by inventory bounce. You
know, production was low because companies were running on their
inventories. They're stopping doing that so now you've got a bounce
in the economy.

But that's also going to run out. So the things we know about
are all going to be negative in the second half of next year. Now the
financial markets, the last month, the financial markets have gotten
really optimistic. You look at things like the term spread on bond
rates. They suggest that the financial markets really think there is
going to be a much more vigorous recovery. I don't see where it's
supposed to come from, so the range is huge here. I would basically
go with Joe Stiglitz. I'm really worried about the second half.

TAPPER: OK, I'm going to have to wrap there. The Roundtable
continues in the green room on ABCNews.com. You can get political
updates all week long by signing up for our newsletter, also on
abc.com. Coming up here, "The Sunday Funnies."

END

TAPPER: And you think -- you think -- you would go farther. I
couldn't really get Senator McConnell to say that Republicans should
campaign on repealing Obama care as they call it. But you think they
should campaign?

DOWD: I think if this bill passes, it's the best thing for the
Republican Party in the short run if this bill passes. I think
there's no question about the polling on this as consistent. The
majority of the country is opposed to it. The majority of the country
thinks their health care, their own health care costs will go up. The
majority of the country thinks the overall cost of the systems will go
up. And the majority thinks their care will get worse.

Now we can argue in Washington or whatever at the Capitol and say
we know better than the public does on this or we know what they
should get, but the country is decided on this. The country is
overwhelmingly decided on this. And Congress has proceeded to go
against what the public wants and pass a bill. And whether it is good
in parts, bad in parts, whatever it happens to be, the country doesn't
want it. And if it passes in January and they don't sell it, which I
don't think they're going to do, because they have to figure out it's
negative in its entirety, they're going to go on to jobs but it's
going to be an albatross on almost every Democrat in a swing district
in the country.

TAPPER: I want to come to you in a second, but in fact one of
the members of Congress speaking against the health care bill is a
former freshman Democrat from Alabama now freshman Republican from
Alabama, Parker Griffith. This is what the National Republican
Campaign Committee was saying about Parker Griffith last year in a TV
ad.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: 2000, the USS Cole was attacked. 2001,
terrorists attack America. 2008, the Marriott in Pakistan is bombed
but Parker Griffith says we have nothing to fear from radical Islam.

PARKER GRIFFITH: I think America's greatest enemy is America and
its materialism. We have nothing to fear from radical Islam.

UNIDENTIFIED MALE: Parker Griffith, wrong for Alabama.

(END VIDEO CLIP)

TAPPER: Now, of course, the Republicans say Parker Griffith is
right for Alabama. But there are those who think that this is
something of a canary in a coal mine, Parker Griffith's defection.
Among them, the former commerce secretary William Daley who said in an
op/ed in the "Washington Post," "While it may be too late to avoid
some losses in 2010, it is not too late to avoid the kind of rout that
redraws the political map. The leaders of the Democratic Party need
to move back toward the center."

Is Daley right? Do the leaders of Democrat Party need to move
more toward to the center?

MARCUS: I thought he overstated the case and I think Parker
Griffith is going to turn out to be a pretty lonely canary in that
coal mine.

There's no indication from talking to the people who would know
that any other potentially squishy Democrats are thinking about
morphing themselves into Republicans. And I think that to get back to
Matt's point about the potential albatross of the health care bill,
absolutely they're going to pivot to jobs, jobs, jobs. Absolutely if
they don't start to also simultaneously sell this health care bill.
We're all talking about it as if it's a fait accompli but it will be
eventually, I think, Senator McConnell's desire not withstanding.

If they don't find a way to also sell it as a positive
transformation, it is going to be an albatross.

TAPPER: How do they do that?

MARCUS: By talking to people. Well, it's both doable and
complicated. The complicated part is that many of the things that it
will achieve will not start until 2013 or 2014. So it's a little hard
to say to people, life is going to be great two elections from now if
you don't have health care or if you're nervous about your health
care. But there's going to be a lot of talk about the immediate
deliverables, which is one of the terms that the administration uses.

So for example, senior citizens -- senior citizens, who are A,
nervous about what's happening to their Medicare, witness grandma,
will have their donut hole filled or somewhat filled very quickly.
And people will be able to keep their kids on their insurance policies
after they're out of college until age 26 or 27. So there's going to
be some focus on that. It is hard to talk about legislation that is
promising something in the future as and inevitably they will, as
people's health premiums continue to go up.

TAPPER: Can the Democrats sell this?

KRUGMAN: Some. I mean, I'm waiting for the first poll that asks
do you want to repeal this which is very different from whether you
approve of it. And I bet you're not going to find anything like those
numbers.

Let me also say about Parker Griffith. As I've looked at it, I
think the correct description of him is he's a living fossil. He's
sort of the last Dixiecrat. All of those conservative Democrats in
the South are now Republicans and here's this one guy whose left over.
It isn't necessarily an omen of very much.

I don't think health care is going to be a big sell for the
Democrats. It's something they have to do. To go through -- this was
something that was a core issue during the campaign. It's a core
promise to the base, even if part of the base is temporarily at least
really riled up as to what they wanted.

So it was something they had to check off. It's a little bit in
a way like the Medicare drug benefit back in 2003 which didn't phase
in for a long time. It was something that Bush had to do in order to
just shore up that front.

So I don't think the campaign will be about health care. I think
it is going to be about jobs, the economy, and just do you want those
guys back in?

BROOKS: When FDR did the New Deal, 70 and 80 percent of the
American people basically had a good view of the government. Now,
like 15 or 20 percent of the American people have a good view of
government. So if you have a whole series of things that look like
big government and a lot of spending, they're going to take it out on
you. And I don't know if more people will switch, but 20 House
members, House Democrats are going to lose in all those states, North
Carolina. They're just going to get wiped out. Harry Reid might get
wiped out. People will get wiped out across the country.

TAPPER: I was just going to say, this is an end of the year
show. So it's a good time for predictions. And you've just offered
yours. Charlie Cook, the respected political prognosticator predicted
that Republicans will pick up 20 to 30 seats in the House, and four to
six in the Senate. You said 20 in the House, how many in the Senate?

BROOKS: I'm with Charlie. Twenty or 30 at least. And look at
states like Illinois which is a Democratic state, got a very moderate,
very impressive candidate, Mark Kirk has a chance to win there.
You'll see some unexpected places. I think assuming things don't
change, the Republicans will do pretty well and they'll repeal half of
health care, only the painful half.

DOWD: Well, I agree with that. I think they're going to
probably pick up 25 seats in the House and they're probably going to
pick up five seats in the Senate.

TAPPER: Still not enough to control.

DOWD: No, but I think one prediction I have in the aftermath, of
that, which I think will happen, the Republicans will misread the
mandate. The Republicans will think it was because of something they
said or they did as opposed to the Democrats went off tangent and
wasn't in line with the American public and the Republicans will do
something, which actually in my view, could be a benefit for Barack
Obama going into 2012 if he has to deal with a more Republican
Congress and then he can pivot against what the Republicans are doing.

KRUGMAN: Can I just say, mega dittos to that?

TAPPER: Prediction for election 2012?

MARCUS: So my prediction is slightly rosier. Let's remember ...

TAPPER: Rosier for Democrats?

MARCUS: Rosier, slightly rosier for Democrats. And let's
remember the president's party always -- almost inevitably loses seats
in the mid-year election. And I think the answer to the question
depends on what Paul can tell us about where the economy is --
particularly where the unemployment rate is going to be in next spring
heading into the fall because that will really determine how people
feel about the incumbent party.

I say some in the House, somewhere in the 20s, anything under 20
will be viewed by Democrats as a huge sigh of relief for them. In the
Senate, I think it's a little bit more complicated. There are more
Republican senators retiring than Democrats and in more divided swingy
type states. And so I would say closer to three.

TAPPER: OK, we are getting close to short on time but I do want
to ask you a question about the economy for 2010. Your fellow
laureate, Joseph Stiglitz has said there's a significant chance the
U.S. economy will contract in the second half of 2010. He's calling
on the government to prepare a second stimulus. Do you think that's
possible?

KRUGMAN: Yes, it's a reasonably high chance. I don't think it's
more -- it's less than 50/50 odds, but you know, what we've got right
now is a recovery that first of all is not showing up very much in
jobs yet. It's being driven by fiscal stimulus which is going to fade
out in the second half of next year and by inventory bounce. You
know, production was low because companies were running on their
inventories. They're stopping doing that so now you've got a bounce
in the economy.

But that's also going to run out. So the things we know about
are all going to be negative in the second half of next year. Now the
financial markets, the last month, the financial markets have gotten
really optimistic. You look at things like the term spread on bond
rates. They suggest that the financial markets really think there is
going to be a much more vigorous recovery. I don't see where it's
supposed to come from, so the range is huge here. I would basically
go with Joe Stiglitz. I'm really worried about the second half.

TAPPER: OK, I'm going to have to wrap there. The Roundtable
continues in the green room on ABCNews.com. You can get political
updates all week long by signing up for our newsletter, also on
abc.com. Coming up here, "The Sunday Funnies."